Electrolux 2012 Annual Report Download - page 50

annual report 2012 notes all amounts in SEKm unless otherwise stated
Property, plant and equipment
Parent Company
Land and
land improve-
ments Buildings
Machinery
and technical
installations
Other
equipment
Plants under
construction
Total
Acquisition costs
Opening balance, January 1, 2011 4 57 918 280 66 1,325
Acquired during the year — — 36 25 20 81
Transfer of work in progress and advances — — 31 23 –54 —
Sales, scrapping, etc. — — –160 –12 —–172
Closing balance, December 31, 2011 4 57 825 316 32 1,234
Acquired during the year — — 15 14 25 54
Transfer of work in progress and advances — — 25 3–28 —
Sales, scrapping, etc. — — –105 –2 —–107
Closing balance, December 31, 2012 4 57 760 331 29 1,181
Accumulated depreciation
Opening balance, January 1, 2011 2 54 778 229 —1,063
Depreciation for the year — — 41 20 —61
Sales, scrapping, etc. — — –152 –10 —–162
Closing balance, December 31, 2011 2 54 667 239 —962
Depreciation for the year — 1 34 23 — 58
Sales, scrapping, etc. — — –95 –2 —–97
Closing balance, December 31, 2012 2 55 606 260 —923
Net carrying amount, December 31, 2011 2 3 158 77 32 272
Net carrying amount, December 31, 2012 2 2 154 71 29 258
Intangible assets with indefinite useful lives
Goodwill as at December 31, 2012, has a total carrying value of
SEK 5,541m. In addition, the right to use the Electrolux trademark
in North America, acquired in 2000, has been assigned an indef-
inite useful life. The total carrying amount for the right is SEK410m,
included in the item Other on the next page. The allocation, for
impairment-testing purposes, on cash-generating units of the
significant amounts is shown in the table below.
All intangible assets with indefinite useful lives are tested for
impairment at least once every year. Single assets can be tested
more often in case there are indications of impairment. The recov-
erable amounts of the cash-generating units have been deter-
mined based on value in use calculations. The cash-generating
units equal the business areas.
Value in use is calculated using the discounted cash-flow model
and based on a three-year forecast made by Group Management.
The forecast is built up from the estimate of the units within each
business area. The preparation of the forecast requires a number
of key assumptions such as volume, price, product mix, which will
create a basis for future growth and gross margin. These figures
are set in relation to historic figures and external reports on market
growth. The cash flow for the third year is used as the base for the
fourth year and onwards in perpetuity. The discount rates used
are, amongst other things, based on the individual countries’
inflation, interest rates and country risk. The pre-tax discount
rates used in 2012 were for the main part within a range of 8.0 to
16.0%. For the calculation of the in-perpetuity value, Gordon’s
growth model is used. According to Gordon’s model, the terminal
value of a growing cash flow is calculated as the starting cash
flow divided by cost of capital less the growth rate. Cost of capital
less growth has been assumed at 6% for all markets. This corres-
ponds to a weighted average cost of capital for the Group of 11%
less an average nominal growth rate of 5%. The cost of capital
and growth rate is estimated to be higher than the average in
emerging markets and lower in developed markets. However the
resulting difference is assumed to be equal in all markets over
time. Management believes that any reasonably possible adverse
change in the key assumptions would not reduce the recoverable
amount below its carrying amount.
Note 13 Goodwill and other intangible assets
Total impairments in 2012 were SEK 54m (3) on buildings and land,
and SEK 98m (64) on machinery and other equipment. The majority
of the impairments relates to the Business Area Europe, Middle
East & Africa. The purchase value of CTI property, plant and equip-
ment was recalculated during 2012 (March), resulting in an increase
of SEK 187m.
Property, plant and equipment in 2011 were increased with
SEK 555m due to the acquisition of Olympic Group in Egypt and with
SEK 382m due to the acquisition of CTI in Chile. Property, plant
and equipment decreased: with SEK 43m due to the divestment
of a real estate in Australia; with SEK 15m due to the divestment of
Electrolux Professional AG – Components in Switzerland; and with
SEK 5m due to the divestment of a real estate in Sweden.
Cont. Note 12
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